Commodity Tokenization

Definition ∞ Commodity tokenization is the process of representing real-world commodities, such as gold, oil, or agricultural products, as digital tokens on a blockchain. Each token typically represents a fractional or whole unit of the underlying physical asset. This process aims to enhance liquidity, reduce transaction costs, and expand accessibility to commodity markets. It transforms tangible assets into tradeable digital units.
Context ∞ News about commodity tokenization often highlights advancements in asset securitization and the increasing intersection of traditional finance with blockchain technology. Regulatory clarity regarding the classification and trading of tokenized commodities remains a key discussion point. The efficiency gains offered by this process are attracting interest from institutional investors and market operators.